Real Estate Investment Companies (REIC) listing

Consob approved (Resolution no. 15996 of  June 26, 2007) the amendments to the Market Rules adopted by Borsa Italiana’s Shareholders’ meeting on April 26, 2007  among others related to specific rules for the admission to listing of real estate investment companies (REIC).

To this end the rules of the Expandi market have been supplemented by adding the definition of “Real Estate Investment Companies (REICs)”, limited companies that engage primarily in investment and/or leasing in the field of real estate.

These integrations align Borsa Italiana to the regulations of the other European countries which already include rules dedicated to the listing of this kind of companies, thus providing a precise set of rules for the real estate companies which might obtain the legal status of “SIIQ”.

Provision is made for a simplified procedure for the admission to listing of REICs in terms of the documentation requested and examined. Real estate companies, that do not intend to qualify as REIC, may apply for admission to trading on the MTA market following the ordinary procedure; in such case the minimum capitalisation has been raised from €40 million to €200 million.

REICs must satisfy the requirements laid down in the Rules and summarised below:

• a minimum capitalisation of at least €200 million;
• a free float equal to at least 35% of the capital;
• the presence in the bylaws of investment and risk concentration limits. In particular, REICs may not invest more than one third of their assets in a single building and the revenue coming from a single lessee may not exceed 20% of the company’s total lease income;
• a high quorum, of 90%, to amend the above-mentioned bylaw clauses;
• REICs must have at least 50% of their assets invested by the date of the start of trading;
• special experience requirements for directors and managers.

The rules introduced also provide for:

• the revocation of the listing of a REIC’s shares if the investment and risk concentration limits contained in the corporate purpose are altered or in the event of their being exceeded for more than 18 months;
• a report comparing the issuer’s model of corporate governance with the recommendations of the Code of Conduct for Listed Companies or the self-regulatory codes adopted by the relevant trade associations for the matters regarding the typical activity of Real Estate Investment Companies;
• the mandatory presence of a specialist to support the liquidity of the issuer’s shares;
• continuous trading in a special real estate segment of the Expandi market;
• special disclosure obligations, including that of notifying Borsa Italiana, for disclosure to the market, of the exercise of the option to qualify as “SIIQs” (Listed real-estate investment companies as defined in the Finance Law for 2007), the adoption and loss of such qualification. The same provisions for disclosure to the market shall apply to REICs and to real estate companies listed on the MTA market that apply for, adopt or lose the “SIIQ” qualification.

The amendments will enter into force on July 23, 2007.

Download press release: VIEW PDF